When I first started off as a landlord, I had a very difficult time finding qualified tenants. The reason that I had a hard time finding qualified tenants was simple: I had no applicants. This resulted in units that would sit vacant for months. Anyone who has been in this situation knows that this is a very frustrating and stressful experience because each day that a unit is vacant is a day of lost rent that can never be recovered. This further means that it is another day which the owner has to come out of pocket to support the property thereby adding to the stress of the situation.
During this time, I would wait by the phone with bated breath, hoping that I would get a call, but the phone would never ring. Finally, I would get a rare call and schedule a showing, only to be stood up (imagine me, alone, in a vacant unit, with tumbleweed rolling by and you get an idea of the situation. OK, there was no tumbleweed, but I really would get stood up a lot.)
Sometimes, I would “luck out," get a call, meet with the prospective tenant at the unit, and get an application. Of course, I would accept the applicant regardless of how unqualified they were. Why would I do this? Because I needed someone in that unit to pay rent and this was the only person who told me that they would do that. Unfortunately, it was from these experiences that I learned that there is something worse than a vacant unit, and that is an occupied unit filled with a tenant who won't pay.
Needless to say, I was doing something wrong, but what was it? At this point I realized that I needed some education, and I was fortunate enough to get some great education on property management, which turned out to be invaluable. (On a side note, I would strongly recommend the property management courses by Mike Cantu & David Tilney as they are both loaded with super content and I have found them to be extremely helpful.)
After extensive studying and reflection on what I did wrong, I implemented a new property management system. This new system, resulted in me going from months without a call, to being flooded with calls, having tons of showings and finding a qualified applicant almost immediately.
So what changed? How did I go from a vacant unit with no sign of a qualified tenant for months to finding a qualified tenant in a matter of days? When looking back, there are three major changes that I found to be instrumental for these improved results. Mind you, these three changes are not fancy, on the contrary, they are very simple. Regardless of their simplicity, they made a huge difference to me and my rentals.
1. Looks Matter
What I did before: When I first started as a landlord, I did very little to improve the appearance of a unit. I did not replace old carpet nor did I paint the walls. This led to my old-just-lived-in-unit looking like, well, an old-just-lived-in-unit. Because of this condition, whenever I was fortunate enough to get a call and was able to show the unit, prospective tenants were never excited at the prospect of living at my unit, and why should they be? It was a tired looking unit that did nothing to spark any enthusiasm among anyone who saw it.
What I do now: Now, as soon as I have a vacancy, I make sure that the unit is CLEAN, CLEAN, CLEAN!!! Mind you, it does not have to be perfect or fancy, but it has to be clean. To get it clean, I want the layout of the unit to be a certain way.
I find that the most important part are the floors, so if a unit has carpet throughout, then I am going to remove it and put in a new floor. For the floors, I prefer to have either laminate throughout with tile in the kitchen and bathroom or tile everywhere except for the bedrooms where I have “islands” of carpet. I like tile and laminate because they are easy to maintain and easy to clean when a tenant leaves, so the floor looks great for the next tenant. They are also cost effective as they last for a long time and do not have to be replaced after a tenant leaves and they still maintain their looks for a long term tenant.
Having the "islands" of carpet are good for when I use tile throughout because it gives the bedrooms a "warm" feeling. Also, being that the carpet is only in the bedroom, it does not get worn out like it would being in a high traffic area. For the “islands” of carpet, I replace them whenever a tenant moves out as the “new carpet” look and smell helps the overall appearance of the unit and since it is a small area, it is not nearly as expensive as carpeting the whole unit.
For the walls, I typically repaint them, unless I feel like the current paint still looks fresh. I have found that “spot painting” often looks like “spot painting,” which adds to the "tired" look that I want to avoid. So if I need to paint, I will paint the whole wall/unit. New paint throughout gives the unit an extra clean look.
I also make sure that “little” things are up to snuff, like I put on new covers over all of the outlets and light switches. While improvements like these might seem insignificant, when they are not replaced, they typically stand out in a bad way. Finally, I have a cleaner that comes in and does a deep cleaning of the unit before I show it.
Ultimately, I do all of this because I want the unit to “pop” and for the applicants to have that “wow” moment when they first see the unit. I have found that when prospective tenants see a unit that is fixed up and clean from top to bottom, it makes a huge difference in them wanting to complete the application. Prospective tenants are excited to live in these types of units and it ultimately results in tenants who are happy to live there for a long time, which is the goal.
2. Affordable is Good
What I did before: I used to push the limit on rental price as I foolishly believed that that was how money was made. I made sure that my unit was the highest priced unit on the market, as I did not want to lose a dollar of potential rent. People would call about the unit and when the conversation turned to the rent, the conversation would end right there as people found it to be too high. Ironically enough, having a high priced unit did not make me money, rather it cost me money as it deterred prospective tenants and kept the unit vacant, which meant lost rent that I would never recover.
What I do now: Today, I do a survey of the market rent for the area. I look at as many comparable units that I can find and get a good idea of the range for rents. To get the rent range, I use a number of different services, including craigslist, rentometer.com and listings of local property management companies. When I get an idea for the range, I price my unit in the lower end of the range. This, along with the clean unit, results in a unit that looks great and is at a reasonable price. When one thinks about it, it is simple business sense, offer a good product at a reasonable price, and it will sell. When you offer a poor product at a bad price, it will not.
3. If a Tree Falls in the Forest and no one Hears it….
What I did before: to say that my advertising was poor would be an insult to poor advertisers. In all fairness, I did not know it then, but I did not do the leg work of the first two steps above to make the advertising work. So, even if I did advertise well it would not have mattered because I messed up with the price and appearance of the unit. Regardless, my advertising was not good, as it consisted of putting up a "for rent" sign out front of the unit and posting maybe one ad on craigslist (with no photos). That was about the extent of my advertising, and the results showed.
What I do now: The biggest difference today is that I make sure that I put a new post on craigslist every day, and this makes all of the difference. I have found that only putting out one ad results in my post going to the bottom of the list rather quickly, but putting up a new ad every day (maybe more) results in the unit being at the top of the list when people search for units in my area. I also make sure that the ads have a ton of photos of the units as having great photos gets people excited about the unit. I have found that my ads will often get picked up by other sites who will increase the visibility of my unit. Finally, I will include a "for rent" sign out front of the unit with a phone number in case there is any neighborhood foot traffic.
Yes, that is it. Nothing very complicated or elaborate, but making these three simple changes of 1. Clean appearance 2. Well priced & 3. Lots of advertising made a huge difference for me in finding a qualified tenant for the unit as fast as possible. Most importantly, I have found that these qualified tenants that I get pay on time, stay longer and maintain the unit, which ultimately leads to less vacancy and better cash flow and that is the most important goal in this game.
What are your thoughts on this list? Is there anything that you think should be added or that you have found helpful? Please comment below with your ideas as I would love to read them, and I will respond.